Relating to public contracts, public fund investing, and lending practices with certain companies that engage in economic boycotts based on environmental, social, or governance criteria, and including effective date and applicability provisions

This bill relates to public contracts, public fund investing, and lending practices with certain companies that engage in economic boycotts based on environmental, social, or governance criteria. The bill creates new Code chapter 12K, which restricts the treasurer of state, the state board of regents, the Iowa public employees’ retirement system (IPERS), the public safety peace officers’ retirement system, the statewide fire and police retirement system, and the judicial retirement system, defined as “public funds”, from entering into agreements with investment managers or proxy advisors that take action based upon improper financial factors relating to economic boycotts based on environmental, social, or governance criteria and not solely on the financial interest of participants and beneficiaries of the public fund. environmental, social, or governance criteria. The bill defines company, economic boycott, explanatory evidence, improper financial factors, investment advisor, protected company, public entity, and public fund. The bill defines company as any profit-making business entity with at least full-time employees. A protected company is defined to include companies engaged in fossil fuel-based energy, timber, mining, agriculture, firearms, firearm parts, firearm accessories, or ammunition activities; and companies that do not or will not commit to meet, beyond what is required by law, environmental standards or disclosure criteria, corporate board and employment, composition, compensation, or disclosure criteria that incorporate characteristics protected in this state under the Iowa civil rights Act, or to facilitate access to abortion, sex or gender change, or transgender surgery. The bill defines economic boycott as taking adverse action intended to penalize a protected company. Improper financial considerations is defined to mean taking any action or considering any factor, beyond what controlling federal or state law requires, with a purpose to further environmental, social, or governance goals related to those characteristics of a protected company under the bill. As to public funds, the bill prevents a public fund from granting proxy voting authority to a person or entering into an agreement with an investment advisor unless the person or investment advisor commits in writing to act solely in the financial interest of participants and beneficiaries of the public fund and not based upon improper financial factors. The bill also requires information on all proxy votes on behalf of a public fund to be posted on a publicly available internet site of the public fund. Finally, the bill provides that the restrictions on a public fund do not apply if the public fund determines that no economically practicable alternative is available. from entering into a contract with a company of $1,000 or more that is engaged in an economic boycott. The bill requires any contract with a company subject to this provision to contain a written verification from the company that it does not engage in economic boycotts and will not engage in economic boycotts during the term of the contract and shall further provide for cancellation of the contract if the public entity has reasonable cause to believe based on explanatory evidence that the company is engaging in an economic boycott. The bill provides that these requirements shall not apply if the public entity determines that the requirements of this Code section would otherwise be inconsistent with the public entity’s constitutional or statutory duties or would prevent the public entity from obtaining the supplies or services to be provided in an economically practicable manner. The bill provides that the attorney general shall enforce the requirements of this new Code chapter. Code chapters 524 and 533, governing state banks and credit unions, are amended to restrict banks and credit unions from utilizing improper financial factors, as defined by the bill, in determining whether to make a loan.9111. The bill takes effect upon enactment and applies to contracts and loans entered into on or after the effective date of the bill.